Chapter 12 Understanding Markets Class 7 SST Exploring Society: India and Beyond NCERT Solutions
Chapter 12 Understanding Markets NCERT Solutions Class 7 Social Science
Page No. 247
The Big Questions
1. What are markets and how do they function?
Answer
- A market is a place or system where people buy and sell goods and services; it can be physical (shops) or online.
- Markets work through the interaction of buyers and sellers, who agree on a price for goods or services.
- Prices change based on demand (how much buyers want) and supply (how much sellers offer).
- Buyers and sellers often negotiate to reach a fair price, and if they can’t agree, no trade happens.
2. What is the role of markets in people’s lives?
Answer
- Markets connect producers (farmers, artisans) with consumers who need goods and services.
- They help people get things they cannot make themselves, like clothes, food, or electronics.
- Markets build trust and relationships; for example, families often rely on local sellers they know.
- Markets encourage innovation by responding to what consumers want, improving products over time.
3. What role does the government play in markets?
Answer
- The government controls prices to protect buyers (like capping medicine prices) and sellers (like minimum crop prices).
- It ensures quality and safety by setting standards and testing goods (e.g., food and medicines).
- The government regulates pollution and protects the environment from harmful market effects.
- It provides public goods (roads, parks, police) that markets don’t supply, ensuring welfare for all.
4. How can consumers assess the quality of goods and services they purchase?
Answer
- Consumers check labels and certifications like FSSAI (food safety), ISI (product quality), AGMARK (agricultural quality), and BEE (energy efficiency).
- They rely on word of mouth from family and friends for trusted recommendations.
- Online reviews and ratings help buyers decide on products, especially for online shopping.
- Consumers look at price, size, color, and durability to choose the best product for their needs.
Page 271 & 272
Back Questions
1. What are the main features of a market? Recall a recent visit to a market to purchase a product. What are the different features of a market that you observed during this visit
Answer
A market is a place where buyers and sellers come together to exchange goods and services. The main features of a market include:
- Buyers and Sellers: Every market has both buyers and sellers. Without buyers, there would be no demand for goods, and without sellers, there would be no supply.
- Goods and Services: Markets facilitate the exchange of goods (like fruits, vegetables, clothes, etc.) and services (like tailoring, haircuts, etc.).
- Price: Prices are determined by the interaction between demand from buyers and supply by sellers. In some markets, buyers negotiate prices with sellers.
- Physical or Virtual: Markets can be physical (like local bazaars or malls) where people meet face-to-face to exchange goods, or online (like e-commerce websites) where people can buy goods from the comfort of their home.
- Competition: In some markets, there are many sellers offering similar products, which leads to competition. This often results in lower prices or better quality for consumers.
- Regulation: Some markets are regulated by the government to ensure fair trading, quality control, and proper functioning.
For example, during my recent visit to a local market to purchase vegetables, I observed the following features:
- There were various stalls where different sellers were offering vegetables.
- Prices were displayed, and bargaining between buyers and sellers was happening.
- I noticed that the goods were fresh and were being weighed using traditional scales, which is a common feature in such markets.
- The seller was negotiating the price of beans with a buyer, demonstrating the feature of price negotiation.
- The market had a lively atmosphere with people buying and selling.
2. Remember the epigraph from a famous economist at the beginning of the chapter? Discuss its relevance in the context of the chapter you have read.
Answer
- The epigraph from Adam Smith, "Prosperity emanates from the market that develops when people need goods and services that they can’t create themselves," is highly relevant to the chapter on markets.
- Adam Smith, a famous 18th-century economist, highlights the role of markets in driving economic prosperity. He suggests that markets arise when people need goods and services that they cannot produce by themselves. This need for goods and services creates a space for exchange — the essence of markets.
- Markets provide a platform for people to meet their needs by purchasing goods and services that they do not produce on their own.
- For example, in ancient markets like the Hampi Bazaar, people traded goods they produced for goods they needed, creating a thriving market economy. Similarly, in modern times, markets have grown to include not only physical markets but also online platforms, making it easier for people to access goods and services from different parts of the world.
- Adam Smith’s quote underlines the importance of these exchanges, which not only fulfill personal needs but also drive economic prosperity by fostering trade, creating jobs, and facilitating the movement of goods and services.
3. In the example of buying and selling of guavas, imagine that the seller is getting a good price and is able to make a profit. He will try to get more guavas from farmers to be able to sell them at the same price and increase his earnings. What is the farmer likely to do in this kind of a situation? Do you think he will start thinking about the demand for guavas in the next season? What is likely to be his response?
Answer
If the seller is making a good profit by selling guavas at a particular price, the farmer is likely to notice this and take steps to meet the increasing demand for the fruit. The farmer might:
- Increase Production: Seeing the seller’s success, the farmer would likely try to produce more guavas to sell, anticipating that there will be more demand.
- Plant More Trees: The farmer might also consider planting more guava trees to increase the supply of guavas in the upcoming seasons.
- Consider Seasonal Demand: The farmer would start thinking about the demand for guavas in the next season and may plan ahead to ensure that he can meet the market's needs. He might even consider planting varieties of guavas that yield fruit during peak demand periods.
- Adjust Prices: If demand increases and prices remain high, the farmer may take advantage of the situation by selling at a higher price.
The farmer’s response will depend on how well he can anticipate the demand for guavas and adjust his production and pricing strategies accordingly. This highlights the role of market dynamics in shaping the production decisions of farmers.
4. Match the following types of markets with their characteristics:
Answer
|
Markets |
Criteria |
|
Physical Market |
Requires physical presence of buyers and sellers. |
|
Online Market |
Buyers and seller meet virtually and can transact at any time. |
|
Domestic Market |
Lies within the boundaries of a nation. |
|
International Market |
Good and services flow outside the nation’s boundaries. |
|
Wholesale Market |
Deals in bulk quantities. |
|
Retail Market |
Server the final consumers with goods and services. |
5. Prices are generally determined by the interaction between demand from buyers and supply by sellers. Can you think of products where prices are high despite a lesser number of buyers demanding the product? What could be the reasons for that?
Answer
Yes, there are several products where prices are high despite a lower number of buyers.
Some examples are:
- Luxury Goods (e.g., designer handbags, high-end watches): These products are priced high because they are seen as status symbols. Even if only a few buyers demand them, the price remains high due to their exclusivity, quality, and brand value. Buyers are willing to pay a premium for these items.
- Rare Collectibles (e.g., rare coins, antique artwork): The price of rare collectibles often remains high due to their uniqueness, historical value, and limited availability. Even if there are fewer buyers, the scarcity factor keeps prices high.
- Specialized Medical Equipment: Products like advanced medical devices or equipment used in specialized treatments are priced high despite lower demand because they require specialized production processes, expertise, and have high development costs.
- Real Estate in Prime Locations: In certain cities, real estate in prime locations can be very expensive, even if there is limited demand. This is because the land or property is in a highly sought-after area with limited availability, leading to high prices despite fewer buyers.
The high prices for these products are influenced by factors like exclusivity, scarcity, perceived value, and high production costs rather than just the demand-supply equation.
6. Look at the real life situation that a retail seller of vegetables encountered: A family came to shop for vegetables. The price of beans that the seller on the cart was offering was ₹30/kg. The lady started to bargain with the seller to bring the price down to ₹25/kg. The seller protested and refused to sell at that price saying he would make a loss at that price. The lady walks away. The family then goes to a super bazaar nearby. They buy vegetables in the super bazaar where they pay ₹40/kg for the beans that are neatly packed in a plastic bag. What are the reasons that the family does this? Are there factors that affect buying and selling which are not directly connected to price?
Answer
There are several reasons why the family might choose to buy vegetables at a higher price in the super bazaar despite finding a lower price at the street vendor’s cart:
- Quality and Packaging: The vegetables at the super bazaar were neatly packed in a plastic bag, indicating better hygiene and quality. This might have influenced the family to pay a higher price for better quality.
- Convenience: The super bazaar may have been more convenient for the family to shop in, as it is a controlled environment with a wider range of products and a more comfortable shopping experience.
- Trust and Reliability: The family might trust the super bazaar for consistently providing good-quality vegetables, which they feel is worth paying a higher price for. They may have had a long-term relationship with the store and were willing to pay a premium for that trust.
- Lack of Time: Sometimes, buyers may not have the time to haggle over prices and may prefer the convenience of paying a fixed price for goods that are packaged and ready to be taken home.
Factors affecting buying and selling are not always related to price. Convenience, trust, quality, and the shopping environment can also play a significant role in a buyer’s decision-making process.
7. There are some districts in India that are famous for growing tomatoes. However, during some seasons, the situation is not good for farmers. With a large quantity of harvest, there are reports of farmers throwing away their produce and all their hard work going to waste. Why do you think farmers do this? What role can wholesalers play in such situations? What are the possible ways of ensuring that the tomatoes are not wasted, and the farmers are also not at a loss?
Answer
Farmers may throw away their tomato harvest due to a surplus in the market where demand is low, and the price is too low to cover their costs. This often happens when the market becomes flooded with tomatoes, and buyers are not willing to pay a fair price.
Role of wholesalers: Wholesalers can play a significant role in managing supply and demand. They can purchase the excess stock from farmers during times of surplus and store it in cold storage facilities. By doing so, they can regulate the supply of tomatoes in the market and ensure that the price does not fall too low. Wholesalers can also help by creating networks where tomatoes can be sold in different regions where demand might be higher.
Possible Solutions:
- Cold Storage: Implementing more cold storage facilities for tomatoes can help preserve them for longer periods, allowing farmers to sell them when the prices are better.
- Diversified Markets: Encouraging farmers to explore markets beyond their local regions, such as exports or other parts of the country, can help them find buyers.
- Supply Chain Improvements: Building better supply chains to ensure that tomatoes reach the market efficiently and without wastage is crucial. This includes better transportation, storage, and distribution systems.
By improving the supply chain, enhancing market reach, and ensuring better price regulation, farmers can minimize waste and increase their earnings.
8. Have you heard about or visited a school carnival/fair organized by your school or any other school? Discuss with your friends and teachers about the kind of activities organized by students there. How do they conduct selling and negotiation with the buyers?
Answer
Yes, I have visited a school carnival/fair organized by my school. These events typically feature a variety of activities organized by students, such as stalls selling food, games, toys, and handmade crafts. There are also live performances, dance shows, and art exhibitions. In these events, students take charge of setting up and running their own stalls.
Regarding the selling and negotiation process:
- Selling: Students often set up a fixed price for their items, such as ₹10 for a piece of cake or ₹50 for a handmade bracelet. They make sure the items are attractively displayed to catch the attention of visitors.
- Negotiation: In some cases, buyers may try to negotiate the price, especially if they are buying multiple items. Students may offer a discount or extra items to persuade buyers to make a purchase. For example, if a person wants to buy three cupcakes, the student might offer them at a lower price, like ₹25 for three, instead of ₹10 for each.
This type of negotiation teaches students valuable skills like communication, pricing strategies, and customer service.
9. Choose any 5 products and check out the label with the certification signs discussed in the chapter. Did you find products that did not have a logo? Why do you think this is so?
Answer
The following are examples of five products I checked, along with their certification signs:
- Packaged Food (e.g., biscuits) – FSSAI (Food Safety and Standards Authority of India) logo. This ensures that the product is safe for consumption.
- Electrical Appliance (e.g., air conditioner) – ISI (Indian Standards Institute) mark. This ensures the product meets the safety standards set for electrical appliances.
- Agricultural Produce (e.g., honey) – AGMARK certification. It indicates that the agricultural product meets specific quality standards.
- Cosmetics (e.g., shampoo) – BIS (Bureau of Indian Standards) logo. This ensures the product meets the safety and quality requirements for cosmetics.
- Clothing (e.g., woollen sweaters) – Woolmark certification. This label assures that the product is made from quality wool.
In some cases, I found that certain products did not have any logo or certification signs.
This could be for several reasons:
- Local or Homemade Products: Some handmade or locally produced goods may not be certified, as they are produced on a small scale or for specific local markets.
- Unregulated Markets: Products sold in unregulated markets or by informal sellers might not follow the certification process. These sellers might skip the certification due to costs or lack of awareness.
- New or Unbranded Products: New products from small or unrecognized brands may not have gone through the certification process yet, as it might be expensive or not required for small-scale production.
10. You and your classmates have manufactured a soap bar. Design a label for its packaging. What in your opinion should be mentioned on the label for the consumer to know the product better?
Answer
When designing a label for a soap bar, it is important to include information that helps the consumer understand the product, its usage, and its safety. Here’s what the label should include:
- Brand Name: The name of the soap brand to make it easily recognizable.
- Product Name: Clear mention of the product, such as “Herbal Soap” or “Lavender Scented Soap”.
- Ingredients: A list of ingredients used in making the soap. For example, “Contains glycerin, lavender extract, coconut oil, and essential oils.”
- Net Weight: The weight of the soap bar, e.g., "Net weight: 100g."
- Usage Instructions: How to use the soap effectively. For example, "Wet the soap and lather with water. Rinse thoroughly."
- Certification Logos: If applicable, include any certifications like FSSAI (for safe ingredients), ISI (for quality assurance), or eco-friendly certifications.
- Manufacturing Date and Expiry Date: To inform consumers of the shelf life of the product. For example, “Manufactured on: 01/01/2023.
Expiry Date: 01/01/2025.” - Benefits: A brief description of the benefits of using the soap, e.g., "Moisturizing and soothing for dry skin."
- Storage Instructions: How to store the soap to maintain its quality, e.g., "Store in a cool, dry place away from direct sunlight."
- Contact Information: The manufacturer's contact details, including phone number, website, or address, for consumer inquiries or complaints.
- Price: Mention the price of the soap bar clearly, e.g., "₹50."
The label should be simple, attractive, and easy to read to encourage customer trust and make the product more appealing in the market.